Many people think blockchain is unsecure because it is being used on dark web and black market easily on a daily basis. But what actually is blockchain? And why is it used in black market?
Think of it as a group chat! Every person in the group has his own personal diary which is used to record transactions. Now a person made a transaction. Person A > Person B. And every single person in the group chat is obliged to record that transaction in their diary. ONE TRANSACTION ACROSS EVERY SINGLE DIARY WILL BE SAME. Why? Because even if one person changes the details of this transaction in his diary, his entry won't match with entries of rest of the group members and eventually they will find out that person has cheated.
That is what block chain is! A database/ledger (kind of register) where information is entered and stored across a network of computers in a way that is transparent (accessible to all people of the network), immutable (unchangeable), and resistant to tampering (changing data). And no single authority or government controls it.
Now why is it called blockchain? Because it consists of blocks connected through chain.
Now think of that diary again every person had, it has pages. Those pages are blocks which can have many transactions written on it until it is completely filled. Once it is filled to the end, it will be locked through a fingerprint called hash. This fingerprint will also be stored on the very start of next page so that both fingerprints match and connect, linking both pages. Page of the diary is block and hash is the chain making BLOCKCHAIN.
Now all the members (computers in the network) will verify these transactions from their diary and once verified they will become completely unchangeable for the rest of life turning these pages into a block. These computers are then given a puzzle to solve. More like they try different combinations of numbers which are called nonce. Whichever computer solves the puzzle first, it is given some bitcoins as a reward and rest of the computers which were in competition just move on to the next block.
Many people think blockchain is only used for money transaction or dealings but that's not true. Blockchain is just a ledger, a diary/register which can store whatever you want it to store. It is used in vast majority of fields like
Banking: You'd send money on Friday night but the receiver will receive it on Monday morning because of the weekend in traditional banking. But in blockchain transaction occurs within seconds.
Healthcare: Doctors can store record of the patient and that record would be permanent. No entity can change it.
Property: If property papers are registered on blockchain, no person can make copy/ fake papers of your property to claim it.
Supply chain: For example Grocery store. An apple can be traced from where and how did it come to the store. In case a virus spreads out, it'd be easier to find out which product caused it and why?
Voting: No one can cheat.
There are some interesting myths and facts about blockchain nobody would tell you.
One of these famous myths is that blockchain is fully anonymous, it cannot be traced. However this is not true. In reality it is not fully anonymous. Each transaction has a specific address and when this address is traced authorities can easily find the person owning it. Even the privacy coins aren't as private as people assume.
Another myth is that blockchain is 100% secure. Whereas blockchain is a coding system and No blockchain is 100% secure until and unless there is no flaw in its coding.
Another myth is that only criminals from dark web use this blockchain. It’s just a lie. Blockchain is more like a convenient and secure ledger that can be used by anyone in the world. Like in the field of banking, healthcare, supply chain, voting and legit businesses.
Now once we have understood what blockchain is, let's dive into the relationship of blockchain and dark web.
Dark web is the part of internet that is not accessible through normal search engines like google. There are special softwares used to access the dark web. There not being a single government or authority controlling the blockchain, it became very helpful for people dealing in black market through dark web. When people finally understood transactions of blockchain are not completely untraceable, they introduced privacy coins in place of bitcoins (type of currency used for financial transactions on blockchain). These privacy coins have actual names too, the most known ones are Monero (XMR) and Zcash (ZEC). What makes them different from bitcoin is the level of cryptography they use. While bitcoin transactions can still be traced back if someone digs enough, these coins use much more advanced codes that hide the info of sender, receiver and amount completely (at least on the paper). This is exactly why dark web dealers moved towards them once they realized bitcoin wasn't as invisible as they thought.
Imagine you want to deal on dark web. But you don't know anyone. You have never met them in personal. Just an online chat and some phrases about them what they have written about themselves on their profile. How could you trust them? If you want to buy something from the seller you can place the order but what if he takes your money and doesn't send the product? Or what if you are the seller and you send buyer the product but he doesn't send you the money? Trust issues right?
Dark web solved this issue for itself. Dark web marketplaces introduced a special way to bridge trust between buyer and the seller called multi signature wallet. In this, buyer, seller and the moderator (the middleman) would sign the contract (any 2 of 3 persons) and then the money would be released. Here the moderator only steps in when buyer and seller can't agree, he checks who's actually telling the truth and signs off with whichever side is right, releasing the amount. This method gave dark web dealers enough confidence to run their operations openly for years, Silk Road being one of the biggest names, operating from 2011 until it got shut down by the FBI in 2013. AlphaBay followed the same path until it was taken down in 2017. Both were massive marketplaces built entirely on this trust system (also called escrow system), and both eventually got caught, proving that no matter how smart the system is, it was never actually invisible to the people looking hard enough.
Dark web dealers thought their privacy coins could save them being never traced back to them but here's the plot twist: Blockchains record is permanent, and even today after so many years of arrest (and later death in custody), his old wallet holdings were still traceable, moving through the network long after his death.
This is exactly why regulators didn't just sit back and watch. As blockchain analysis got smarter, authorities introduced rules like the FATF's Travel Rule, which forces exchanges to share sender and receiver details for transactions crossing a certain amount. So the same technology dark web dealers once thought would protect them forever, is now the reason they get caught years later.
Blockchain was never built to help crime, it was just neutral, and neutral things can be used both ways. Turns out the ledger nobody could argue with, was also the ledger that never forgot.